Benchmarking in Luxury Organizations

Hakan Ozel, General Manager – Shangri-La Hotel, Dubai

Building up and sustaining a competitive edge through quality is an important part of a strategic plan in luxury brands and their organizations. Communicating this strategic plan, mainly of setting the goals, continuous improvement process, ensuring gradual improvement, creativity along with innovation, and working toward world-class competitive capability never stops. However, the questions are, what is this competitive edge and capability, and at what level does it stand on to target to supersede?

Benchmarking is the answer! It is an external focus on internal activities, functions, and operations to achieve continuous improvement. Starting from the analysis of existing activities and practices within the organization, the objective is to understand existing process, or activities, and then to identify an external standard by which that the process or the activity can be measured or judged. The benchmark can be established in any functional and administrative area at any level of a luxury organization. The ultimate goal is quite simple: To be better than the best – to attain a competitive edge!

A certain kind of comparative measurement, either in the operations whilst serving and producing for the customers, or performing in the heart of the house, is essential. In sports games, the scoreboard announces the winner and loser. For the business executives of today, such scoreboards are financial reports and strategic management performance metrics, such as balance score cards.

You cannot manage the business while continuously looking at the scoreboards though – performance furnishes the scoreboards… In this respect, benchmarking is emerging in leading-edge luxury organizations as a tool for obtaining the information required to support continuous improvement and gaining a competitive advantage.

It is indeed the continuous process of measuring the services, products and practices against the fierce competition or those companies perceived and recognized as the industry leaders. Through the use of benchmarking concepts and techniques, it becomes extremely important that future success of the luxury require more than the gutfeel or instinct, and more than just doing what they have always done quite a bit better.

When it comes to luxury business, be it in service or product, the continuous pursuit of excellence is an underlying and ever-present goal of benchmarking practices. The starting point of achieving excellence is the customer. The customer of luxury business sets the expectations for performance. It is the ultimate judge of its quality, especially when it is realized that the customers populate the luxury operational and corporate landscape.

Benchmarking provides leadership with the tools needed to make the hard decisions about resource allocation and the strategic focus of the organization. It does this by providing objective measurements, or scorecards, of the company’s efforts to meet the stakeholders’ demands. Benchmarking develops a series of objective measures of success of the corporate gameplan as set against the internal goals as well as against the external organizations performing at recognized levels of excellence.

Benchmarking is an early warning system of impending problems, too. If its siren sounds, a change and revision is needed. Through the use of objective, market-oriented measures of performance, it focuses attention where the attention is needed and rips away the blinders that prevent learning. It is more than a one-time measurement; it is a tool for creating the learning organization.

There are two fundamental issues of today’s business that the organizations are struggling to identify and subsequently solve almost every day: One is finding out what the real problem of business outcome with an absolute root cause is, and the other one is setting very thorough and the most realistic goals to achieve. Benchmarking is a true vitamin pill for both.

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